Surprise, surprise, surprise, Republicans sold the farm, especially on health care. 

CPI on medical care services from the BLS via the St. Louis Fed

Let's look inside Congress’s Omnibus Healthcare Malpractice

Both parties in Congress appear to have given up on enacting healthcare policy changes through regular order—i.e., committee hearings, debate and up-or-down floor votes. That explains the omnibus spending bill’s mish-mosh of healthcare measures, and please don’t call them reform.

Medicaid rolls have swelled during the pandemic by some 24 million to 98 million, and nearly one in three Americans is now on the program. If not for the emergency, most of these new beneficiaries would be removed because their income exceeds state limits or for other reasons such as they haven’t complied with modest cost-sharing rules.

The Foundation for Government Accountability says the monthly cost of ineligible enrollees is $15.2 billion, $11.4 billion of which is picked up by the feds. But states’ $4.8 billion share now exceeds the $2.9 billion they receive in extra federal Medicaid funds each month.

Congress had exempted Medicare providers from an annual 2% cut under budget sequestration rules during the pandemic. Under the omnibus, these cuts will return starting next year and continue through 2032. However, the bill averts a separate 4% annual Medicare payment cut that under budget rules was supposed to take effect next year.

This is budget trickery that lets Congress claim savings tomorrow to finance new entitlement expansions today. 

Nearly One in Three on Medicaid and More Entitlement Expansions

Nearly one in three is on Medicaid, and effectively Republicans approved a buy now pay later shell game to keep it that way. 

If you think this isn't inflationary, well, think again. With government picking up more of the tab, prices will soar. Amusingly, however, the CPI will report this as negative.

The CPI only counts expenses directly paid by consumers. If we had Medicare for all, prices would skyrocket but direct consumer healthcare spending would sink. 

Isn't the CPI wonderful?

To tie loose ends, the PCE index does include expenses paid on behalf of consumers so it would rise. 

Inflation Reduction Act

If you think the Inflation Reduction Act will reduce inflation then you are delusional. Heck, the title speaks for itself.

The most like likely thing any bill accomplished is the opposite of the title. The second most likely thing is that problems surface elsewhere.

Note that the first and second are not mutually exclusive. Both can easily happen.

The third most likely thing is nothing at all. The fourth most likely thing is an accidental improvement to something unrelated. 

And finally, on very rare occasions (although I struggle to name one), a bill actually performs as intended with no negative repercussions. 

Will the Inflation Reduction Act Do Anything?

On July 31, I asked Will the Inflation Reduction Act of 2022 Do Anything at All?

Regarding inflation, Penn Wharton concluded "The act would very slightly increase inflation until 2024 and decrease inflation thereafter. These point estimates are statistically indistinguishable from zero."

The Penn Wharton estimate is that the provisions taken together lead to an increase in GDP of nothing by 2030 and 0.2 percent in 2050.

We can only hope, but that's a big zero in my book. Yet, that's a very good outcome compared to the two most likely ones. 

My estimate, however, is that something will surface somewhere leading to a net-negative outcome.

More Omnibus Details Coming 

Already we can conclude Republicans sold the farm just so they could get the military spending provisions they wanted. 

For more disgusting details of the Republican cop-out, please see Congress Will Pass Ugly $1.65 Trillion, 4,155-Page Bill Members Will Never Read

Q: What else is hidden in the spending bill? 
A: We will find out later and it will range from terrible to worse than terrible.

Senate Republicans knew this but looked away. 

Merry Christmas.

More By This Author:

How Did Covid Impact The Minimum Wage Someone Would Accept For A Job?
The New Home Sales Report Is Another Negative Revision Swamp In November
What Company Will Be The First To Lose $1 Trillion In Market Cap?